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New York Forex Report: All Eyes On Yellen

New York Forex Report: All Eyes On Yellen

New York Forex Report: Chinese Consumer and Producer Price Inflation rise by more than expected. The latter soared to 6.9% for January, marking a stark change in conditions from this time last year when the metric measured -5.3%. It provides a warning of the simmering price pressures that may be facing the global economy. This morning, January’s UK CPI & PPI miss hit GBP during the European session, owing to energy-related base effects and the impact of GBP depreciation on import costs. Attention through the afternoon will be firmly on Fed Chair Yellen’s semi-annual testimony to the Senate Banking Panel (15:00 GMT). As highlighted yesterday, this will be a good gauge of policymakers’ thought process ahead of March’s FOMC. Expectations have been scaled back of late, with only a 30% probability of a March hike ‘priced-in’ following the weak wage growth figures and re-evaluation of the reflationary impact of President Trump’s fiscal agenda (for which a ‘phenomenal’ announcement is forthcoming). However, it is conceivable that Yellen uses her appearance to push back against the latest slippage in expectations, which could be the trigger for meaningful USD upside. Fed’s Lacker, Kaplan and Lockhart also speak today.

FX Majors: EUR Greek bailout negotiations dominated headlines the last two days. The European Commission also warned that growth in the Eurozone would moderate to 1.6% in 2017 from last year’s 1.7% before picking up again to 1.8% in 2018. GBP will be looking to build on its bullish momentum following a recent run of impressive local data when it takes in UK CPI today. Anything on the hotter side of expectation will likely give the currency another boost against the Buck. JPY According to a Bloomberg report, the Bank of Japan now holds more than 40% of Japanese government bonds. And there is no sign of that BOJ’s buying will be stopping or slowing anytime soon, even as the BOJ’s yield curve control is driving unprecedented purchases of benchmark 10-year debt, aggravating concerns the central bank is at risk that it will run out of willing sellers.

Technical: Near term support sited at 1.0670 removed and now becomes near term resistance a close back below 1.0580 resets near term bearish bias, opening a move to test symmetry swing support at 1.0515. Only over 1.0710 stabilises selling pressure.Retail Sentiment: BullishTrading Take-away: Short

Technical: Only a 112 sustained breach will open 110.70 symmetry swing support underpinned by 109.90 50% retracement of the move from August 2016 lows. Near term resistance sited at 113.30 removed and now becomes near term support, a close over 114.50 reasserts upside targets.Retail Sentiment: NeutralTrading Take-away: Neutral

Technical: Symmetry swing support at 120.40 removed, the failure below 120.40 opens 118.70 as the next downside objective. Near term resistance sited at 121.50 a close over 122.10 resets attention on upside targets.Retail Sentiment: NeutralTrading Take-away: Neutral

Commodities FX: GOLD eased for the second straight session on Monday extending the selloff from last Friday due to Trump’s upcoming “phenomenal” tax plan comments which extended the strong rally in US stocks. This gold price decreased by US$10 to close at US$1,224.40. OIL prices went south on Monday (13 Feb) despite OPEC’s Monday report that said that the group’s total production fell by 890,000 barrels in January (from Dec) and a compliance record of 90%, very much in line with the International Energy Agency’s report released on 10 Feb, a sign that OPEC is following through on its promise to reduce production. AUD Australia’s NAB business conditions index climbed higher to 16 in January (December: 10), marking its highest level since October 2007. The survey showed that firms were more willing to hire and increased capital spending as economic outlook improved, pushing confidence indicator up to more than a 3-year high last month. The index surged to 10 in January (December: 6). CAD Canadian Prime Minister Justin Trudeau visited US President Donald Trump at the White House on Monday and in a joint press conference, Trump said that America is deeply fortunate to have a neighbour like Canada and hailed the opportunity to “build even more bridges” of commerce. PM Trudeau reiterated that NAFTA is a real concern for many Canadians because their jobs depend on trade with US and he hoped that any changes to NAFTA must continue to allow free flow of goods and services.

Technical: 1.3150 resistance eroded, over 1.32 opens a move back to test 1.3370.Price action remains erratic as price attempts to base above pivotal 1.30. Near term support is sited at 1.3050.Retail Sentiment: BullishTrading Take-away: Short

Technical: Rejection from equality objective area at 55.30, a close below symmetry support at 50.68 confirms a medium term high and opens a retest of pivotal 49.00. Near term resistance is sited at 54.50.Retail Sentiment: BearishTrading Take-away: Long

Patrick has been trading for the past ten years. After liquidating several accounts in his early days he stopped 'gambling' and applied himself as a student of risk. Self taught and more self aware thanks to Mr Market. Patrick applies simple technical strategies based around market price and time structure to identify high probability trade locations.